United States Court of Appeals For the Ninth Circuit

IN THE

United States

Circuit Cowt of Appeals
Hor the Ninth Cirruit e

AMERICAN MINERAL PRO-
DUCTION COMPANY, a cor-
poration, we <4
Plaintiff in Error, \w 5, ios

VS.

KF. M. HELSLEY,
Defendant in Error.

Brief of Befendant in Error

Upon Writ of Error to the United States District
Court of the Eastern District of Washington,
Northern Dwision.

ZENT & POWELL, BFP TZ
Spokane, Washington,
L. C. JESSEPH,
Colville, Washington,
Attorneys for Defendant in Error.

YOUNG PRINTING COMPANY, SPOKANE

IN THE
United States

Qirruitt Court of Appeals
Hor the Ninth Circuit

AMERICAN MINERAL PRO-
DUCTION COMPANY, a cor-
poration,

Plaintiff in Error, ne

VS.

F. M. HELSLEY,
Defendant wn Error.

Brief of Befendant in Error

Upon Writ of Error to the United States District
Court of the Kastern District of Washington,
Northern Division.

ZENT & POWELL,
Spokane, Washington,
L. C. JESSEPH,
Colville, Washington,
Attorneys for Defendant in Error.

STATEMENT OF THE CASH.

In the month of July, 1917, the defendant in
error commenced this action in the Superior Court
of Stevens County, Washington, against the plain-
tiff in error and one C. R. Cole to recover $5500.00,

2

the purchase price of six motor trucks described
in the amended complaint. (Tr., p. 2.) There-
after the cause was removed to the District Court
of the United States for the Eastern District of
Washington, Northern Division, and came on for
trial on the 23rd day of April, 1918, before the
court and a jury. The issues are very simple. It
is alleged in the amended complaint that the plain-
tiff sold the motor trucks to the defendants and
that the defendants purchased the same for the
consideration above mentioned and judgment is
asked for the amount of the purchase price. At
the conclusion of all of the evidence a motion was
made by the defendant in error for leave to amend
his complaint so as to state a sale to the plaintiff
in error, American Mineral Production Company,
which was allowed, plaintiff in error refusing at
that time to make any showing of prejudice
although invited so to do by the court. (Tr., p.
104.) The defendants answered jointly denying
all of the material allegations of the complaint and
pleading affirmatively the statute of frauds. (Tr.,
pp. 4 and 5.) The affirmative defense was denied
by a reply. The cause was tried and submitted to
the jury upon the theories thus presented by the
pleadings and no error is assigned upon the court’s
instructions.

The testimony shows that in the month of March,
1917, the defendant in error and one John Wilson,
doing business under the firm name of Cashmere
Truck Line, entered into a contract with the Amer-

3

ican Mineral Production Company to haul its mag-
nesite ore from its quarries to the town of Valley
in Stevens County, Washington. The co-partners
entered upon the performance of this contract and
continued to operate under the same until the Ist
of June, 1917, when Wilson’s interest in the co-
partnership was taken over in the name of Cole,
who at the time was president of the American
Mineral Production Company. The hauling was
then continued until about the Ist day of July,
1917, after which time the defendant in error did
no hauling. On the 25th of June, 1917, Mr. Cole
went to the town of Valley, where he met the de-
fendant in error, and negotiations were commenced
for the transfer of Helsley’s interest in the trucks
to the plaintiff in error. These negotiations were
eontinued up to and including the 14th day of
July, 1917, when they were finally consummated at
the banking house of the Spokane & Eastern Trust
Company in the City of Spokane. At that time
Mr. Cole, acting as president of the plaintiff in
error, and a Mr. T. P. Smith, who was really
accountant for the company, purchased Helsley’s
interest in the trucks for the consideration of
$5500.00, the money to be paid on the following
Wednesday, July 18, 1917. Immediately after these
negotiations were completed the defendant in error
returned to Valley, delivered the trucks and his
supply of gas and oil to the plaintiff in error, who
accepted the same, and thereafter for a period of
about one week operated all the trucks in the trans-

4

portation of magnesite from its quarries to the
railroad at Valley, employed and paid the men who
operated the trucks, and used the gas and oil which
the defendant in error turned over to it. The
plaintiff in error also organized what it chose to
eall a transportation department, having supervi-
sion of the operation of the trucks and the hauling
of the magnesite, and placed at the head of such
department a Mr. Moore, who prior to that time
had been an employee of the company. At the time
of this transaction the plaintiff in error was under
written contract with the defendant in error to
deliver to him at least 600 tons of magnesite a
week for transportation from its quarries at Val-
ley, Washington, at a price of $2.00 per ton and
upon the consummation of this purchase and sale
the plaintiff in error was relieved from the burdens
of that contract, the company having failed to de-
liver the required amount of magnesite. (Tr., pp.
24 and 62; Exhibit 1.) The jury returned a ver-
dict in favor of the defendant in error and against
plaintiff in error in the sum of $5753.00, being the
purchase price with interest, upon which verdict
judgment was entered after a motion for a new
trial had been overruled by the court.

ARGUMENT.

if.
It is contended by plaintiff in error that no con-
tract or sale with or to the plaintiff in error was
shown by the evidence in this case. This conten-

D

tion cannot be maintained. The defendant in error
testified positively that he sold his interest in the
trucks to the plaintiff in error for the sum of
$5500.00, that he delivered the trucks and the gas
and oil on hand into the possession of the plain-
tiff in error; that the plaintiff in error accepted
such possession and operated the trucks and used
the gas and oil in the transportation of its mag-
nesite from its quarries to the town of Valley.
These facts alone constitute a consummated trans-
action and passed the title in the trucks from the
seller to the buyer. It would not seem necessary
to cite authority to sustain this fundamental rule
of law but since plaintiff in error has seen fit to
raise the question defendant in error directs the
attention of the court to the following authorities:

35 Cyc. 305 and 322;

Wilhams v. Ninenuire, 23 Wash. 398;

Izett v. Stetson & Post Mill Co., 22 Wash.

300 ;
Lauber v. Johnson, 54 Wash. 59;
Skinner v. Griffiths & Sons, 80 Wash. 291.

All of the above authorities hold that on facts
similar to those in this action the transaction con-
stituted a sale. Furthermore, the trial court in-
structed the jury as follows:

‘Before the plaintiff can recover in -this
action, therefore, he must prove two facts:
he must prove that a sale was made, as alleged
in his complaint, and he must prove that the
property was delivered to and accepted bv the
corporation. If you find from a _ preponder-

6

ance of the testimony offered here that there

- was a sale, that is, that there was an agreement
between the parties on the part of the vendor
to sell, and on the part of the purchaser to
buy; that is, 1f you find that their minds met,
and that the consideration was agreed upon,
and the property was delivered and accepted
by the corporation in furtherance of that sale,
your verdict will be for the plaintiff for the
amount claimed.’’

No exception was taken by plaintiff in error to
this instruction and defendant in error contends it
is binding upon all of the parties to this action.

I.

It is contended by plaintiff in error that because
the transaction was not reduced to writing on the
14th day of July, 1917, it could not be considered
as having been consummated. ‘T'o sustain this con-
tention authorities are cited on page 13 of the
brief for plaintiff in error. We have no quarrel
with the rule of law announced in these cases but
the rule is not applicable to the case at bar, for the
reason that the parties herein had met and dis-
cussed and agreed to all the terms and conditions
and the transaction was finally consummated in
accordance with the agreement then made, the
property was delivered, accepted and used by the
plaintiff in error to the exclusion of the defendant
in error, thereby taking it out of the rule announced
in the cases cited.

9 Cyc. 282;
Hodges v. Sublett, 91 Ala. 588; 8 So. 800.

7

_ Furthermore, it is a well established rule of law
that whether there is or is not a sale depends upon
the intention of the parties, which intention must
be determined by the jury from all of the facts
and circumstances surrounding the parties at the
time. In the case at bar that question was squarely
submitted to and passed upon by the jury as shown
by the court’s instruction which we have heretofore
quoted.
a0 Cyc. 278.

HiT.

Plaintiff in error contends that because the writ-
ten consent of the vendor which had sold the trucks
in question under a conditional sale contract was
not obtained no title could be passed. If that were
true, it was a complete and independent affirmative
defense which should have been pleaded or at least
the question should have been submitted and
brought to the attention of the court and counsel
at the time of the trial in order to give us a chance
to meet it and the court an opportunity to instruct.
Nothing of the kind, however, was done. The bril-
lant idea first appears in their brief in this case.
The case having been tried, submitted and deter-
mined upon well-defined theories it is fundamental
that the parties will not be permitted to suggest
in the appellate court theories or objections not
ealled to the attention of the lower court. Had this
question been suggested, defendant in error was
prepared by written evidence to establish the fact

3)

beyond any question. On the other hand, the repre-
sentative of the vendor, Mr. Kover, was present
and participating and in close communication with
them all the time.

LV.

It is also contended by plaintiff in error that
under the law of the State of Washington a cor-
poration cannot enter into a co-partnership. Suf-
fice it to say, that we are not concerned with the
question of partnership between the plaintiff in
error and Helsley because it is not before the court.
The only question to be passed upon here is whether
or not Helsley, defendant in error, did not sell his
interest in these trucks ‘to the plaintiff in error,
the question of partnership not entering into it
in the remotest way. If the plaintiff in error did
purchase Helsley’s interest in the trucks it would
not become a co-partnership with him on that ac-
count, for the moment it acquired his interest the
partnership was entirely dissolved, assuming for
the purposes of the argument only, that one had
existed. There is no law in this state which pre-
cludes a ‘corporation from buying partnership
property or the interest of one partner and we are
at a loss to understand how this question can have
any bearing upon the case in any manner whatso-
ever.

V.

Tt is contended by plaintiff in error that Cole,

who, it is admitted, was the president of the Amer-

0

ican Mineral Production Company, was without
authority to purchase Helsley’s interest in the
trucks. (The record in this case is wholly silent
with reference to any fact concerning this ques-
tion.) The plaintiff in error had in its possession
its by-laws and such other records as the company
had seen fit to make with reference to the power
and authority of its officers but it did not see fit
to introduce such records in evidence in this action.
If it is true, as contended by plaintiff in error,
that its president had no authority, how easy it
would have been to prove this fact by conclusive
evidence. The fact that no such evidence was pro-
duced suggests to us that none existed. <A dis-
eussion of the rules of law with reference to the
power and authority of the president of a ecor-
poration will be found in:

10 Cye. 903-1069-1087 ;

Annotated Cases 1913 (D) 648;

Annotated Cases 1913 (E) 846;

Annotated Cases 1916 (A) 474.

The question of the ratification of an unauthor-
ized contract by a corporation is covered by the
above eltations which become pertinent in this case
in view of the fact that plaintiff in error accepted
the trucks and operated them to its own advantage.

WAL.
It is next contended by plaintiff in error that

having alleged a sale to Cole and the American
Mineral Production Company jointly, and having

10

approved a sale to the corporation only, there was
a material variance between allegation and proof.
Defendant in error respectfully submits that there
is no merit in this contention. At the close of
plaintiff’s case in chief, counsel moved the court
separately for each of the defendants, challenging
the sufficiency of the evidence and asking for a
dismissal of the action as to each. The motion was
first made on behalf of the defendant C. R. Cole
and after some discussion, which will be found on
pages 72 and 76, inclusive, was granted. The same
motion was then made for the plaintiff in error
and denied. No question of variance was raised by
anyone at this time. At the close of all of the evi-
dence in the case plaintiff in error again challenged
the sufficiency of the evidence and moved the court
for a dismissal, which was denied. (Tr., p. 103.)
No question of a variance was made at this time
by plaintiff in error. After the case had been
argued and the court was ready to instruct he
called attention of counsel to the’ fact that the com-
plaint alleged a joint sale and that perhaps there
could be no recovery unless the complaint was
amended, so as to eliminate Cole entirely. At that
time counsel for defendant in error moved the
court for leave to make such an amendment, which
was granted. At the same time the following took

place:

“MR. RUSSELL: I object to any amend-
ment at this time. It seems to me that 1t comes
rather late. If they found that Mr. Cole was
not liable, then was the time, if any, when they

it

should have asked leave to change their plead-
ings. It seems to me that under the condi-
tions here that we should make a motion to
dismiss this case for the additional reason that
there is a variance between the proof and the
pleadings.

THE COURT: That objection was not
called to my attention at the time the motion
for non-suit was directed to the other defend-
ant. Had it been, I probably would have di-
rected a non-suit to both and allow the amend-
ment. If you can show that you will be preju-
diced at this time, except purely as technical
defect, I will hear from you.

MR. RUSSELL: We submit it as we have
it, and take an exception.

THE COURT: I will allow the amend-
ment.’’

After having confessed at the time of the trial
that it was not in position to show that it would
be prejudiced if an amendment was allowed plain-
tiff in error cannot now raise the question of fatal
variance. In conclusion defendant in error directs
the attention of the court to the fact which is
plainly disclosed by the record in this case, which
is this. At the close of the plaintiff’s case in chief
on motion to that effect the defendant Colé was
dismissed from the action because the proof showed
that a sale had been made to the plaintiff in error
and not to Cole individually. Immediately there-
after plaintiff in error proceeded to prove to the
jury by the interrogatories of Cole and Smith that
the sale was made in fact to Cole. It is respect-
fully submitted that the plaintiff in error in this
ease cannot blow its hands to make them warm and

12

its soup to make it cool. If the sale was not made
to Cole then it was made to the plaintiff in error
and we think this fact is abundantly established
by the record before this court. In fact Cole as
an individual had no use whatever for the trucks
in controversy but the plaintiff in error did have
use for them and did use them. The record also
shows that counsel for the American Mineral Pro-
duction Company were paid by the company for
services rendered in connection with this transac-
tion and the fact that Wilson’s interest in the
trucks had been taken in the name of Cole is ex-
plained by the further fact that Cole took most
of the mineral bearing properties owned by the
plaintiff in error in his own name. By purchasing
Helsley’s interest in the truck line the plaintiff in
error got from under its contract to provide 600
tons of ore a week for transportation at $2.00 per
ton. On the entire record it is respectfully sub-
mitted that the judgment of the trial court should
be affirmed.

ZENT & POWELL,
Spokane, Washington,
L. C. JESSEPH,
Colville, Washington,
Attorneys for Defendant in Error.